Cognizant Technology Solutions Corporation (CTSH): What Does Valuation Ratios Tell Us?

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Cognizant Technology Solutions Corporation (NASDAQ:CTSH) saw a downside of -0.50% to close Tuesday at $63.92 after subtracting -$0.32 on the day. The 5-day average trading volume is 5,767,220 shares of the company’s common stock. It has gained $64.52 in the past week and touched a new high 3 times within the past 5 days. An average of 5,334,135 shares of the company has been traded in the last 20 days, and the 50-day average volume stands at 4,711,690.

CTSH’s 1-month performance is 14.90% or $7.90 on its low of $55.48 reached on 12/28/22. The company’s shares have touched a 52-week low of $51.33 and high of $93.47, with the stock’s rally to the 52-week high happening on 01/12/23. YTD, CTSH has achieved 11.77% or $6.73 and has reached a new high 7 times. However, the current price is down -31.61% from the 52-week high price.

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Insider Transactions

CTSH stock investors last saw insider trading activity on Nov 07.Mackay Leo S. Jr. (Director) most recently sold 3,300 shares at $52.79 per share on Nov 07. This transaction cost the insider $174,218. Director, Abdalla Zein, sold 4,368 shares at a price of $65.44 on Sep 09. Then, on May 17, Director Patsalos-Fox Michael sold 5,687 shares at a price of $74.40 per share. This transaction amounted to $423,139.

Valuation Metrics

CTSH stock has a beta of 1.04. Moving on to other valuation ratios, the trailing price-to-sales (P/S) ratio is 1.66 while the price-to-book (PB) in the most recent quarter is 2.76, with the price to cash flow ratio at 17.54.

Cognizant Technology Solutions Corporation’s quick ratio for the period ended September 29 was 2.30, with the current ratio over the same period at 2.30. As well, the company’s long term debt to equity for the quarter ending September 29 was 0.05, while the total debt to equity was 0.05.. In terms of profitability, the gross margin trailing 12 months is 36.40%. The firm’s gross profit as reported stood at $6.9 billion against revenue of $18.51 billion.

Earnings Surprise

For the quarterly period ending September 29 this year, Cognizant Technology Solutions Corporation’s cash and short-term investments amounted to $689.0 million against total debt of $1.52 billion. Net income and sales went down compared to those figures reported in the previous quarter. Net income grew 13.51% to $629.0 million, while revenue of $577.0 million was 8.27% off the previous quarter. Analysts expected CTSH to announce $1.16 per share in earnings in its latest quarter, but it posted $1.17, representing a 0.90% surprise. EBITDA for the quarter stood at more than $939.0 million. CTSH stock balance sheet for the quarter ending September 29 shows that total liabilities totaled 5.39 billion, with total debt at $1.52 billion. Shareholders hold equity totaling $513.92 million.

Let’s look briefly at Cognizant Technology Solutions Corporation (CTSH) price momentum from a technical analysis perspective. The 9-day relative strength index as at close on 24 January was 65.02% to suggest the stock is trending Neutral, with historical volatility in this time period at 39.86%.

The stock’s 5-day moving average is $62.65, reflecting a +1.52% or $0.96 change from its current price. CTSH is currently trading +15.25% above its 20-day SMA, -0.45% above its 100-day SMA. However, the stock’s current price level is away from the SMA50 by +18.33% and SMA200 by-26.45%.

Stochastic %K and %D was 65.08% and 57.88% and the average true range (ATR) pointed at 1.75. The RSI (14) points at 62.86%, while the 14-day stochastic is at 67.17% with the period’s ATR at 1.73. The stock’s 9-day MACD Oscillator is pointing at 0.65 and 1.90 on the 14-day charts.

Analyst Ratings

In the most recent analyst report for Cognizant Technology Solutions Corporation (NASDAQ: CTSH), MoffettNathanson downgraded it to an Underperform rating. They previously had a Market perform rating on the stock. Analysts offering their rating for CTSH stock have a consensus rating for the stock as Hold. Currently, 5 brokerage advisors rate CTSH as a “sell,”, while 18 advise that investors “Hold.” 1 analysts have rated the stock as underweight. 1 rates the stock as overweight while 3 have offered a “buy” rating.

What is CTSH’s price target for the next 12 months?

Analysts have a consensus price target ranging from a low of $45.00 and a high of $93.00, with their median price target at $61.50. Looking at these predictions, the average price target given by analysts is for Cognizant Technology Solutions Corporation (CTSH) stock is $62.72.


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